The Cabinet Committee on Economic Affairs (CCEA) today approved the following proposal of Department of Telecommunications regarding continuation of reservation quota for M/s. ITI Limited:

(i) To continue the reservation quota at 30% of the requirement of BSNL/MTNL for ITTI for products manufactured by it as well as on turn key projects (like GSM network roll-out).

(ii) ITI would accept orders under reservation quota only after the price is known and further if the same is commercially viable.

(iii) BSNL/MTNL will give 70% advance against the orders placed on ITI so that ITI does not face the problem of working capital for the execution of the orders subject to adequate safeguards for proper utilization of these advances.

(iv) The aforesaid policy measures shall remain in force for a period of one year w.e.f. 21.09.2009 and shall again be reviewed considering the financial health of ITI and advantages derived in revival package as decided by CCEA in its meeting dated 23.02.3009.

Background

M/s. ITI Ltd., Bangalore, a Public Sector Undertaking under Ministry of Communication & IT, Department of Telecommunications (DoT) has incurred accumulated loss of Rs.3219 crore as on 31.03.2009.

The financial position of M/s. ITI is very bad. CCEA, in its meeting held on 28.01.2009 also directed DoT to bring up a comprehensive proposal for financial restructuring of M/s. ITI Limited. Accordingly, a revival package for ITI Limited is under consideration of the Department of Telecom.

In order to enable ITI to survive in the competitive environment of telecom manufacturing, BSNL and MTNL have been extending reservation benefit of 30% alongwith 70% advance to ITI Ltd. The validity of reservation benefit extended to ITI expired on 20.09.2009.

Implementations Strategy and Targets:

BSNL and MTNL will be requested to extend the benefit of reservation quota to ITI Limited for a period of one year w.e.f. 21.09.2009.

Major Impact

The extension of the benefit of 30% reservation quota with 70% advance from BSNL and MTNL will ensure enough orders for ITI for the production activities.

Details and Progress of Scheme if already running

CCEA in its meeting held on 20.09.2006 had extended the benefit of 70% reservation quota for ITI for a period of three years which has since expired on 20.09.2009.